Performance

Appraisal
and
ADL
Potential
Evaluation
32
Basically, any form of analysis, review, evaluation in any form formal or
informal, oral or documented, open or confidential for any purpose and at ACeL
any time constitutes an appraisal.
Chapter 1 : PERFORMANCE APPRAISAL - AN OVERVIEW

Performance Appraisal is an essential and inescapable managerial activity for enhancing organisational performance. It is essential for all administrative and
training and developmental decisions and motivating employees. However, despite many developments and innovations, uneasiness about appraisals
continues to persist. The validity, objectivity and usefulness of appraisal are often questioned.

Basically, any form of analysis, review, evaluation in any form formal or informal, oral or documented, open or confidential for any purpose and at any time
constitutes an appraisal. However, for management students, we could define Performance Appraisal as a "format exercise in which an organisation makes an
evaluation, in documented form, of its employees, in terms of their contributions made towards achieving organisational objectives". The format of evaluation
needs to be organisation specific and may consist of comparing performance against agreed standards as also desired personal attributes and behaviors
demonstrated.

HISTORY OF PERFORMANCE APPRAISAL

The known history of formal performance appraisal goes back to third century when the emperors of the WEI dynasty (A.D. 221 -265) appointed an Imperial
Rater to evaluate the performance of official family members. In the industry, the first reported performance appraisal was perhaps introduced in Robert
Owen's Cotton Mills in Scotland in 1800s. In the later part of the nineteenth century the military and the government organisations in the Western world also
started using formal performance appraisals for administrative purposes. Large scale use of appraisal systems in the industry for managerial personnel only
started in 1930s and 1940s.

However, as per Mihir K Basu’s survey, the appraisal system for managerial personnel in Indian industries was introduced as per details given below:

a. Union Carbide :1940

b. The Tata Iron & Steel Company (TISCO) :1953

c. Volta's :1954

d. Bata :1950

Public Sector Units (PSU) set up in India after independence had a confidential reporting system, right from their inception, on the lines of civil servants. Both
the military and the civil services in India of course had their own appraisal systems for a long time before independence. All these systems were generally
based on selective traits and human-relations oriented attributes such as "getting along with people", etc.

ISSUES IN APPRAISAL

There are three major issues in performance appraisal:

a. Purposes of appraisal system?

b. Performance criteria - what needs to be appraised?
c. Measurement technique - how to appraise / measure the criteria?

Purposes of Appraisal System

Initially the appraisal systems were started for the purposes of making administrative decisions relating to promotions, transfers and salary increases.
However, over the years the performance appraisal systems are being called upon to serve a variety of purposes. These are:

a. Administrative - Decisions on promotion, transfers, placements, salary increases, discharges and organisational planning.
b. Motivational - Counselling, self appraisal and participative goal setting.
c. Developmental (Counselling, training and development, communication).
d. Performance Improvement (through MBO, participative goal setting and other work planning processes).
 e. Legal (for legal requirements and decision supporting rationale).

While achieving one or two purposes from the same PA system may be more practical, a multitude of purposes can lead to incompatibility and problems.

Performance Criteria

The second issue of major concern in performance appraisal is: "What is to be appraised" i.e., criteria for appraisal. The criteria, to serve its purpose, should be
relevant to the job, directly observable, verifiable and measurable. In the search for a good match between the criteria and the job, the development passed
through the following three stages:

a. Appraisal by personality traits and behaviors / skills demonstrated.

b. Appraisal against objectives (MBO).
c. Appraisal of 'managers as managers'.

Current practice, in the Western World and India seems to prefer a combination of both (a) and (b) above. However, despite desire to do so, MBO has not yet
become popular with a large number of Indian companies.

Two major trends, however, are noticeable:

a. The emergence of hybrid systems that incorporate the features of several approaches, and
b. The increased use of "Appraisal by Results".

How to Appraise the Criteria

The third important issue in performance appraisal is how to measure performance accurately and objectively. Over the last four decades a variety of
techniques and methods have been tried and even abandoned. Starting from "Merit Rating", these methods include "Trait Appraisal", "Forced Distribution",
"Forced Choice", "Critical Incidents", "BARS", "Graphic Rating Scales", "Global Essay Type", "MBO" and "Rating Managers as Managers".

All the methods and techniques used so far have their own limitations. The vulnerability of trait based technique to rater biases is common knowledge. Global
Essay Type is highly dependant on the writing ability of the rater and makes inter-employees comparisons difficult. The MBO or the result-oriented methods
have a distinct advantage over the other methods as they are more factual and are less susceptible to rater-biases. However, they too make inter-employees
comparisons difficult and have faced problems even in joint-setting of goals and targets. By and large, two major trends noticeable are:

a. The growing acceptance of hybrid systems that incorporate the features of several approaches.
b. The increasing use of "Appraisal by results" or MBO.
c. The technique to be adopted should be organisation specific and should fit the purpose for which it is intended.

OTHER AREAS OF CONCERN

The two other areas of concern in performance appraisal are:

a. Objectivity and accuracy of appraisal and

b. The degree of openness in appraisal process

Objectivity

All through the development of appraisal system, there have been continuing efforts to identify valid performance criteria and technique to enhance objectivity.
One obvious source of errors in evaluation has been the rater biases. Traditionally, the immediate superior has been the appraiser. Experience has shown,
that in many cases, he suffers from certain handicaps, such as lack of opportunities to observe the employee, unfamiliarity with specific job requirement and
even lack of appraising skills. In some cases even personal prejudices have resulted in biased ratings. This had led to search for alternative raters. Self
appraisal, multiple raters, reviewing officers, 360 degree appraisal and many other dimensions have been experimented with.

Experience and research have also brought out that no rater (immediate superior or reviewing officer or multiple raters) is totally free from biases but each
adds a new perspective to the appraisal. Multiple rating, therefore, appears to be more useful for greater objectivity. However, every additional rater adds to
administrative complexity and cost.

A very important point from experience and research that has emerged in this regard is that well designed educational programs for appraisers have a
substantial impact on enhancing the objectivity and accuracy of appraisals.

Openness
There has been considerable debate on the degree of openness desired in the performance appraisals. The practices followed varied from organisation to
organisation. Comparatively there has distinctly been much less openness in public sector. The practices varied from being strictly confidential to
communication of only "adverse comments in writing". In majority of private sector organisations in India, the appraisal systems required some form of
communication - either a gist of the report was given orally and the reaction of the appraisee recorded by the appraiser or in some cases the report on
appraisal (not on potential) was actually seen and signed by the appraisee. The general practice all over, however, was not to disclose "Overall rating" and
potential to the appraisee.

The arguments advocated in favour of disclosure of appraisal reports are:

a. The appraisee should know how he is performing and how his performance is being viewed by his superior.
b. To motivate him to improve his performance and to help and guide him to develop his capabilities, and
c. To strengthen superior - subordinate relationship.

Here, it must be recognised that in the larger perspective of openness, the thrust should be on openness of relationship rather than on the disclosure of
recorded information on the appraisal form. In any case, when a superior feels constrained to record diluted evaluation for fear of possible negative reaction of
the subordinate, he is not really being "OPEN" in the real sense of the term.

The arguments given against disclosure of appraisal reports are:

a. Appraisers faced with the prospect of showing their comments to the appraisees, often tended to be over-generous rather than honest in their
appraisals.
b. Disagreements may focus more on the words used in report form and this may become the main issue of appraisal discussion.
c. Superior - subordinate relationship may be irreparably damaged.
d. Favorable rating, particularly of potentials, may be viewed by the appraisee as a promise for advancement in career.

OPENNESS AND SUBJECTIVITY

It would now be apparent that there is an intimate relationship between "Openness" and "Subjectivity". An essential condition for the kind of openness that is
healthy and functional is constructive management of subjectivity. The more inaccurate and subjective the appraisal, the greater is the potential for problem in
openness. On the other hand openness itself could be a potent source for inaccuracy and distortions in appraisal.

In the end, it is suggested that the degree of openness that is desirable in an appraisal system in a particular organisation should not be guided solely by the
idealistic concerns for openness or by a desire to follow a more progressive trend or merely due to white collar union pressures. The desirability or otherwise of
openness - its nature and extent - in an organisation at a particular point of time will have to be decided keeping in mind the purposes of appraisal as well as
the consequences of openness. However, in general, due to greater awareness, use of result oriented methods of appraisal and union and legal pressures,
there is a definite trend, in recent years, towards increasing openness and a more participative approach towards performance appraisals.
Chapter 2 : UNDERSTANDING PERFORMANCE APPRAISAL

Traditionally, one of the main reasons for implementing a performance appraisal system has been compensation decisions. The concept of paying for
performance is universal and undisputed. The problem that hinders successful implementation is the difficulty in measuring performance. With ever increasing
specialization greater demands for participation and the dependence on many individuals, groups and processes to achieve results, the valid and accurate
measurement of performance is also becoming more and more complex. Practitioners and researchers have not yet been able to find the optimum solution. In
fact, there are no simple solutions to these complex problems. There are both technical and human problems in objective and accurate measurement of
performance. Between the two, the human problems are more difficult to overcome.

FACTORS INFLUENCING MEASUREMENT OF WORK PERFORMANCE

On the face of it, measurement of work performance of an employee appears simple. However, a deeper look reveals number of areas in the process of
appraisal which give rise to problems. The figure 2.1 given below is a simple representation of the major factors that influence the measurement of work
performance.

In any work situation Individual Characteristics (2) and Situational Characteristics (1) interact to yield the Work Performance (3). Individual
Characteristics (2) include ability (such as knowledge, skills, social and emotional factors, past work experience, education and training), motivation and role
perception. Situational Characteristics (1) are all aspects of work setting other than single individual whose performance we are considering. These include
the immediate superior, peers, other superiors, work design, reward system, organisational structure, policies and climate and even the environments. The first
point to note here is the problem of discriminating individual performance per se. For example, even the best efforts of a good salesman can be adversely
effected due to lack of organisational support.

Let us now proceed further to Performance Measurement Procedures (4). This implies determining Performance Criteria, the weightage to be given to each
dimension, who all to initiate / review and administration of performance appraisal system. Of these, the selection of appropriate criteria and weightage
determination of each dimension has continued to be a questionable aspect. We have yet to find the right answers and hence the dissatisfaction in appraisal.

We now go on to the next stage of Work Performance 'Score' for Individual (5). Based on the selected criteria and Other Aspects (4) the immediate
superior is required to allot a "score" on a predetermined scale (may be points 1,2,3,4 etc., or average /above average / outstanding). Here, we face the third
difficulty of Immediate Superior's biases and subjectivity. If there are more than one rater, the problem is further magnified.

To sum up Performance Measurement Procedures act as imperfect translators of performance into some quantified index of work performance. A major
concern of any form of performance measurement is to reduce these imperfections to a minimum.

WHO SHOULD BE THE APPRAISER

Who all should be involved in rating of performance of an individual? At first glance, this appears to be the easiest of the measurement problems to resolve. By
far, the most frequently and commonly used rater is the immediate superior. Let us examine this further.

Most organisations desire four major aspects of information from their appraisal system:

a. How well is the employee performing?

b. Is the employee fit and ready for a promotion or lateral transfer to a job with different knowledge, skill and responsibility requirements?
c. What kind of training and development programs need to be provided to enhance overall present and future employee performance?
d. Should the employee be demoted or his services terminated?

IMMEDIATE SUPERIOR

In most cases, the immediate superior is considered most suitable to provide the relevant information for each of the above critical areas. The reasons are:

a. He has the greatest opportunity to observe the appraisee's performance and to provide feed back.
b. He best knows the responsibilities and duties of the jobs within his domain.
c. He can be best aware of the subordinate's strengths and weaknesses and can relate demonstrated subordinate performance to specific individual
capabilities.
d. He is the one person from whom most subordinates want to receive performance related feedback.
e. He is most influential in establishing a conducive workplace environment for higher level of performance.

A major weakness of having only the immediate superior appraise performance relates to personal issues like friendship, first impressions, stereo-typing, Halo
and Horn effect etc. These personal factors can bias any rating and contribute to contamination of appraisal.

REVIEW

An employee's performance appraisal is normally a threatening issue. All kinds of emotional issues begin to appear. Every one involved in the appraisal
process must appreciate that a performance appraisal process must realise that a performance appraisal rating and report is not the end of the process. All
employees who are being rated must be confident and fully aware that their ratings are being reviewed by higher level of authority and no one will receive
unfair treatment as also that their past good performance will be on record and considered for promotion / transfer decisions.

Basically, review of performance appraisal should involve the following steps:

a. Immediate Superior - subordinate Review (Appraisal Interview)

b. Review by Higher Levels of Management.
c. Personnel Department Review.
d. Monitoring, Auditing and Appeals.

Appraisal Interview (Immediate Superior - subordinate review)

Possibly the most important and difficult part of the entire appraisal process is the meaningful Performance -related dialogue between the immediate superior
and the appraisee. In many cases, such a dialogue is either not conducted or is conducted in a manner that leaves the appraisee dissatisfied or even
threatened. This aspect is discussed in detail in Chapter 5 on Counselling.

Review by Higher Level of Management

Review of performance appraisal report of an employee, initiated by his immediate superior, by higher levels of management is a very important aspect of any
appraisal system. Besides providing useful insights into the subordinate work units, it also enables the reviewing officers to evaluate the performance of their
immediate subordinate managers (who initiated the appraisal reports) and builds confidence in the system amongst employees. Normally, most Performance
Appraisal System has at least one higher level of review.

Personnel Department Review

Personnel departments have been always made responsible for maintaining personnel records. As such they have always been asked to institute, modify and
administer a performance appraisal system. The availability of Computer-Based Information System (CBIS), now, has made their scope more comprehensive
in relation to performance appraisal. They are now in much better position through CBIS for data collection, storage, analysis, summarization and
dissemination.

Some of the major functions of personnel department in relation to performance appraisal review are:

a. Institution of the performance appraisal system.

 b. Administration of the system - timely completion of reports and their corrections.
c. Dissemination of specific data to concerned departments.
d. Analysis of initiating officer's reports for biases and consistency.
e. Identification of changes and inconsistencies in an employee's performance over an extended period of time.
f. Pin pointing problems and errors for corrective actions.
g. Comparison of rating behaviors (distribution of ratings) among raters.
h. Variation in ratings relative to a specific performance dimension.
i. Identification of action taken as a result of performance appraisal outputs.

Monitoring, Auditing and Appeals

In view of the potential for subjectivity and criticality of performance appraisal data, it is essential that a distinct and formal system of monitoring, auditing and
appeals against unacceptable ratings be incorporated. This should be in addition to the normal personnel department review. This is all the more necessary in
large organisation, employing more than 500 or more employees.

Monitoring: A district and formal monitoring component is meant to provide internal surveillance and smooth and effective operation of the performance
appraisal system. It needs to be a continuous process that identifies problem areas, incorrect actions, errors, inaccuracies and inconsistencies in the entire
system. Monitoring component should include:

a. Review of appraisal ratings by the rater's immediate superior and very occasionally by still higher level of management upto the chief executive.
b. Review of ratings by staff personnel specialists.
c. Ratee's participation through performance feedback on rated performance and possibly some kind of comparison data.
d. Review by specially designated members of the work unit (of the ratee) who have monitoring responsibilities.
e. Specific probes directed towards work units, appraisers and individuals in which ratings appear to be inconsistent or out of tune.
f. Specific attention and probe on ratings that appear to discriminate on grounds of race, sex, religion, age or state of origin rather than demonstrated
performance.

Auditing: The auditing component of the performance appraisal system differs from monitoring in that while monitoring is an ongoing internal review process,
the auditing is done at unannounced and irregular intervals by a completely independent unit. The auditing unit normally works under the direct authority of the
top management and is tasked to review the entire operations of the organisation with a view to identify problem areas and significant weakness and specify
follow-up actions to be taken. Its report should be sent to the top management for review who may then send, with their comments and directions, to the
concerned managers for their responses. Like the financial audit, this auditing unit is also given specific instructions regarding the timing, approach, the extent
of the audit and the procedures to be followed and reports to be submitted.

Appeals: Performance appraisal reports have a great impact on the careers and lives of the employees and hence an effective appeals process must be
incorporated in the performance appraisal system. It must be seen by the employees as a relief valve and as a valid and open forum where they can air their
performance related grievances without fear of subsequent punitive actions. The appeals must be heard and reviewed by adequately senior managers who
have the due authority to arbitrate and pronounce judgments in an unbiased manner. The kind and quantity of appeals are an excellent source of information
regarding appraisal problems in the current performance appraisal system and can be fed directly into the monitoring and auditing processes for corrective
actions.

MANAGING SUBJECTIVITY

Traditionally, we have always assumed that 'subjectivity' in appraisals, in all its forms is undesirable and dysfunctional. To this end all measures for improving
objectivity in measurement of performance have concentrated heavily on curbing the freedom of the appraiser to exercise his judgement and on removing
opportunities for biases. There are no doubts that subjectivity can cause errors and distortions in appraisal. But it must also be recognised that any kind of
evaluation does involve judgement, subjectivity, therefore, would also be inevitable.

Let us look at it a little more in depth. Could subjectivity also have a positive role in appraisals? All activities related to appraisals -be it the identification of
relevant performance criteria, the determination of acceptable standards, observing the significant aspects of behaviour or in the assessment of such
behaviours, involve exercising of judgement on the part of a manager / appraiser. The quality of these judgments and the value of subsequent appraisals will
be determined by the quality of the manager / appraiser's perceptions and insights, his observation skills and cognitive capabilities and his sense of values
matured through years of experience. Would it be correct to totally eliminate these qualities of human mind? In trying to eliminate subjectivity altogether would
it not be like "throwing away the baby along with the bath-water".

An appropriate course of action may therefore, be to try, on the one hand, to remove, control or change the dysfunctional components and on the other, to
nurture, develop, enrich and utilize the valuable components of subjectivity. The ultimate aim in any appraisal should not really be to remove subjectivity or
judgement, as such, but to improve the accuracy, quality and value of appraisals. Subjectivity, therefore, need not be smothered, it needs to be managed
constructively.

The strategy for constructive management of subjectivity and improving the quality of appraisals may include some of the following measures:

a. Development of relevant performance criteria:

i. Jointly (superior and subordinate) setting of clear, specific and pre-determined goals.
 ii. Emphasis on observable job related behaviours and not on personality traits.
b. Active involvement of user managers and selected employees in development of appraisal system.
c. Imaginative training programs to improve quality of judgments for appraisers.
d. To provide a system of multiple judgement on the final appraisal. This should include sharing of observation, perceptions and opinions with the
appraisees and other concerned managers with a view to correct possible distortions of judgement and to enrich the quality of final appraisal.
e. The review system should be strengthened to ensure greater job related contact with the appraisees and adequate appraisal discussions between
the appraisers and the appraisees.

Personnel department review can also greatly assist the organisation to develop and implement training program for improving individual and organisational
performance.

THE TIMING OF APPRAISALS

It is a common practice in almost all organisations to conduct a formal performance appraisal once a year. This implies reporting appraisals on the specified
format, holding appraisal interviews, reviews and appeals, if any. While this annual formal exercise may be more practical and administratively manageable,
this has some flaws. In this the most recent behaviours will probably have the greatest influence on the annual rating because it is almost impossible for
human brain to accurately remember and reflect on the demonstrated behaviours of appraisees over a 365-days period.

Because of this selective memory or inability to recall performance related information by involved parties (the appraisee, the appraiser and the reviewing
authority), it may be better to shorten the formal periods for appraisal and review of performance. Although it may be impractical and unnecessary to review
performance formally on a daily, weekly or even monthly basis, the administration of quarterly or a six monthly appraisal is possible and more desirable.

However, irrespective of the frequency of formal appraisal, informal reviews of performance and the identification and discussion of performance-related
problems should be a consistent and on-going process.
Chapter 3 : METHODS OF PERFORMANCE APPRAISAL

OVERVIEW OF METHODS

Organisations have used and continue to use a wide variety of procedures, instruments and methods for rating the performance of their employees. The
methods have varied from one that do not require any kind of rating instrument (Proforma) to trait appraisal to finally the more complex appraisal by results.
Earlier we used to broadly classify methods in two categories i.e., Traditional and Modern (Appraisal by Results, Assessment Centre and Human Asset
Accounting). However, with the passage of time, this classification has since been abandoned.

Strauss and Sayles classify methods in three groups: (1) Traditional Performance Rating, (2) Newer Rating Methods, and
(3) Result-Oriented Appraisals. The Traditional Methods which stressed the rating of appraisees personality traits by his immediate superior are gradually
being abandoned. The Newer Rating Methods only represent improvement upon traditional methods. The result oriented methods involve joint setting of goals
by superior and subordinates and are being increasingly adopted.

Rock and Lewis classify methods into two categories (1) Narrow Interpretation - i.e., As a rating device only, (2) Broad Interpretation -i.e., as an overall
management concept. The narrow interpretation is considered as a post-mortem of a subordinate's performance against specified criteria, by his immediate
superior during a predetermined period of time, often, the preceding year. It includes methods like trait or behaviours demonstrated, rating scales, the ranking
method, the employee comparison method, the forced distribution method, the critical incident method and the performance standard method. The broad
interpretation involves a broad purview, although the performance -standard method is still used as a basis. It is called as "Accountability Management,
'Management by Objectives' or 'Management by End Results". It no longer relates to a backward look but embraces a continuing and on-going process linking
the past, present and the future activities in managerial positions.

Let us look at the strengths and weaknesses of some of these methods.

SIMPLE OR STRAIGHT RANKING

This is the simplest, least costly and possibly one of the more accurate appraisal methods which is very useful in small groups where the appraiser intimately
knows each member. It requires the rater to rank from best to poorest (first, second, third and so on) all members of a work unit performing the same job. It is
helpful in decisions on salary progression, promotion and selecting people for selective appointments but can't be used at all for development or for giving
feedback.

GRAPHIC RATING

Graphic Rating scales method had become fairly popular in the past, in a number of industries because of its simplicity and doing away with the writing ability
of the appraiser. In this, the scales are usually constructed in terms of either alphabets (e.g. A, B+, B, C+, C, D etc., in the descending order) or in terms of
brief descriptive objectives (such as outstanding, very good, good, fair, poor etc.). While this method facilitated comparison with peers for salary progression
and promotions etc., it was found to be highly subjective, lacked depth and hence, could not be used for feed-back or development.

BEHAVIOURALLY ANCHORED RATING SCALES (BARS)

This method provides statements of standards against which the performance of an appraisee is evaluated. These standards are put on the scales in BARS.
While developing BARS, small group discussions are conducted with would-be-appraisers and appraisees to identify the important dimensions of a job which
need to be evaluated. These job dimensions tend to form Behaviourally Anchored Rating Scales. For example for a managerial position the significant job
dimensions may include: planning, organising, controlling, leadership, communication and cooperation / coordination.

Each job-dimension is represented on the appraisal format by a vertical scale with "Excellent" performance at the top and "very poor" at the bottom with a
number of scale points (five to nine) ranging between these two extremes. For example for a five job dimension job, there will be five scales in the appraisal
format each having several anchors, each indicating varied amount of performance level. Each anchor is represented by a statement e.g. for a "Verbal
Communication" dimension excellent performance may be indicated by the statement "Checks verbal instructions against written procedures checks to ensure
the subordinate heard others correctly, briefs replacements quickly and accurately". The appraiser is required to indicate the performance level of appraisee on
each scale.

This method has the following advantages:

a. The evaluation is based on job behaviours.

b. Makes 'feed back' more feasible and objective.
c. Provides participation to both appraiser and appraisee during discussion on job dimensions and designing of BARS.
d. Facilitates selection decisions and in deciding behavioral training objective.

Notwithstanding the above advantages, BARS is a time consuming method and more research is required to eliminate certain types of appraiser errors.
PAIRED COMPARISON METHOD

This method usually involves evaluation of individuals in term of their overall ability to do their present job. Each individual is paired with every other individual
in the work unit. This may be done on the basis of individual traits or the overall ability. This procedure becomes complicated when the number of individuals
for evaluation is large. For example, if the number of individuals to be evaluated is 4, the possible number of pairs (comparisons) is 6. If the number of
individuals are 10, the possible number of pairs is increased to 50. This number of comparison is given by the formula N (N - 1) / 2, where N is the number of
individual.

Over a period of time a number of paired - comparison methods like "Deck-of-Cards", "Stub Selection", "Paired - Comparison Ranking Table", "Card-Stacking"
and "Alternative Ranking" have been developed. Thus, larger the number of people to be appraised more unwieldy and complex the system.

FORCED CHOICE METHOD

This method was evolved to overcome the problems of personal biases and lack of objectivity in performance appraisal. In this technique the appraiser is
presented with a set of alternative phrases and is required to choose and tick-mark one of the alternatives - the alternative, which, to his mind, represents the
closest approximation to the description of the appraisees performance or behaviour. The efficiency of the method lies in selecting the set of statements in the
development of the scale. As the appraiser has no access to the scoring key, it enhances the overall objectivity - the errors of leniency, 'halo' and central
tendency are minimized. This method is however, costly in practice, because the statements / phrases must be custom - tailored to the particular job and the
industry. Obviously, the results of evaluation can not be used for counselling and training purposes.

THE CRITICAL INCIDENTS METHOD

This method was developed by Flanagan Burns and is also designated as "Critical Requirements System" and the "Performance Record Program". This
technique envisages devising for each job a list of critical job requirements. For example, one of the job requirements for a foreman may be "Getting along with
others" or "Meeting schedules". It requires the appraiser to maintain a record of critical incidents which he considers to be successful and unsuccessful work
behaviour. The merit of this method is that all evaluations are based on objective evidence instead of subjective ratings. However, it is time-consuming, costly,
requires sharp observation and analytical skills and many employees consider constant surveillance a threat to work-place relationship. It is indeed very useful
for Counselling and providing feed-back to the subordinate.

An example of a negative critical incident record could be as under:

"2/27 Employees responded impulsively and with little tact when employee Suresh refused to work overtime in order to complete an urgent requirement".

THE FIELD REVIEW METHOD

In this method, the appraiser, normally a personnel specialist (or a representative of the personnel department / specific work unit or an outside consultant)
interviews the employee's immediate superior and others who have observed or have knowledge of the employee's work. Based on their responses to a series
of structured questions, the appraiser rates the employee. This draft report is again discussed with the concerned immediate superior and a final appraisal
report is prepared. This method's merit lies in the fact that majority of supervisors prefer oral evaluation interviews to the written procedures, reduces appraiser
biases, and that the management gets better acquainted with the performance and development of employees.

THE ESSAY METHOD

An old traditional method, in which the appraiser describes the employee within a number of broad categories, such as (a) the appraiser's overall impression of
the employee's performance, (b) the strengths and weaknesses of the employee in relation to his present job, and (c) the promotability of the employee.
Although, this method can be used independently, it is more frequently used in combination with other methods of appraisal.

The strength of this method depends upon the writing skills, recall strength and analytical ability of the appraiser. It is of course time consuming and not
suitable for inter-appraisee comparisons.

RESULT-ORIENTED APPRAISAL

This method provides custom-made standards for evaluation for specific jobs. In this appraisals are based on specific performance targets which are
established jointly by the superior and subordinate. These are subsequently used as guide for operating and jointly evaluating the contribution of the
employees. This method more relates to the future rather than the past. As the subordinate himself has been actively involved in setting targets and evaluating
performance, it is expected to lead to improved commitment and loyalty on the part of the subordinate. It is also more objective.

This method, though more objective, is not recommended for promotion purposes and requires sufficient ground, work before launching in an organisation.
This method is also designated as Management By Objectives (MBO). It involves the following major steps:

a. Establishment of organisational mission and objectives and communicating the same downwards through the organisational hierarchy.
b. Managers and subordinates analyse the organisational objectives from the perspective of their work units and jobs and establish their work unit
goals.
c. Managers and subordinates prioritize their goals (Key Result Areas) and then, in turn jointly agree on the achievement of specific goals. These goals
should be observable, measurable and time bound.
d. Develop action plans for achievement of the identified goals within the constraints of available resources.
e. Manager and subordinates monitor progress through the goal achievement period and at the end of the period, measure the degree of goal
achievement in a performance review session.

MBO provides a frame work within which individuals are highly motivated to achieve their targets/ goals. However, experience has revealed that it is not a
panacea for all the ills. It has many limitations. Besides being costly and time consuming, it becomes in practice, a top down non-negotiable process which
originates with the objective goal setting and allotment of resources at the superior's behest. By it self, therefore, it has not found favour with many
organisations. However, it is being adopted gradually in a diluted form and combination with other methods. This method should not be introduced as a crash
program in organisational setting. Sufficient ground work and change of mindset of all managers and subordinates should be accomplished before launching
the result-oriented appraisal program.
Chapter 4 : PROBLEMS IN APPRAISALS

OVERVIEW

Performance appraisal is an essential and inescapable managerial activity. Appraisal is necessary for all important decisions relating to people - may it be
placement, promotion, remuneration and reward, training and development or long-term human resource planning and organisational development. Yet, in
spite of its importance, uneasiness about appraisal has been a long-standing feature of management. The validity, objectivity and usefulness of appraisals are
often seriously questioned. There is also no doubt that during the past four decades, many developments and innovations have taken place in this field. Still
many, issues remain unresolved.

There are mainly three basic issues which have engaged the attention of all:

a. What are the purposes of an appraisal system?

b. What is to be appraised or measured (Performance Criteria)?
c. How to appraise or measure performance accurately and objectively (measurement methods and techniques)?

All the above issues are inter-related and each one of them influences the other two.

PURPOSES

There are primarily two issues relating to purposes. One issue is the different kind of purposes that an appraisal system can serve and the second, whether
and to what extent it is possible to achieve the different purposes through the same process of appraisal.

We are by now aware that there are broadly five groups of purposes that a performance appraisal system can serve i.e., Administrative, Developmental,
Motivational, Performance Improvement and Legal. It is the second issue, where the organisations try and achieve a variety of purposes through the same
system, which creates many problems. Douglas Mcgregor, Norman RF Maier, GA Randell and many other researchers have pointed out the incompatibility of
some of the different purposes that are being sought to be achieved through the same appraisal process.

PERFORMANCE CRITERIA

The second major issue in appraisal is that 'by what criteria should the performance of an employee be evaluated. The determination of appropriate (RIGHT)
performance criteria has been one of the most difficult problems of appraisal systems. It is obvious that the criteria selected should be relevant to job
performance, directly observable, verifiable and measurable. The traditional approach in appraisal was to evaluate personality-traits such as loyalty, initiative,
integrity, dependability etc. Severe criticism of this approach led to use of multiple judgments, group rating, critical incident method and the Forced Choice
Method. Appraisal by objectives (MBO - Peter F Drucker - 1954) was the next step. Thus, despite its initial fervour, it did not take long to identify its
deficiencies. It was realised that the reactions to the trait-approach was pushing the pendulum too far in other direction by expunging aspects of evaluating
people's behaviour. The following major drawbacks came to light:

a. The result approach can not identify potential.

b. Goals with the right degree of "Stretch" are difficult to set.
c. It leads to a disregard for less quantifiable but qualitatively important aspects of job performance.
d. Actual achievements are often influenced by factors beyond employee's control.
e. The system tends to emphasise the short-term at the expense of the long-range achievement.

This led to the search for alternative means to supplement the result - oriented appraisal. The concept of "Appraising managers as managers" (Fundamental
skills of planning, organising, staffing, directing and controlling -Harold Koontz) and development of sophisticated psychometric devices for identifying specific
job-related behaviours. Two major trends, in this regard are identifiable:

a. Use of hybrid - systems of appraisal that incorporate features of several approaches, and
b. The increasing use of features of MBO / result oriented approaches.

HOW TO APPRAISE PERFORMANCE

The third important issue in performance appraisal is "measuring performance objectively and accurately. Over the years a wide variety of methods and
techniques have been experimented. These include methods like Ratings, Global Essays, Forced Distributions, Forced Choice, Critical Incidents, BARS, MBO,
and Self Appraisal etc. Essentially all these methods and techniques were tried and are still being used to varying degree with a view to:

a. Strengthen the objectivity of appraisal.

b. To compare and classify different employees for purposes of salary, placements and promotion decisions, and
 c. To ensure a reasonable dispersal of employees along a scale, by moderating individual biases of raters and inter-departmental variations.

Of all the methods used so far the result oriented approaches and traditional rating scales with appropriate organisation - specific modification are still the most
widely used methods.

PROBLEMS IN APPRAISALS

There is a great deal of uneasiness and even unhappiness with performance appraisals. It is only rarely that one comes across employees who are happy with
the appraisal system in their organisation. The subordinates complain that their bosses try to rate their performance without really knowing what they are doing
and the constraints under which they are working. They are also not happy because given the same performance levels, different bosses’ rate performance
differently.

The superiors are unhappy because the form -filing has often becomes a ritual. They find little improvement in their subordinate's performance. They also do
not even come to know the fate of their various recommendations for their subordinate's training, placement and promotions. The personnel departments are
not happy because most of the forms are never received in time or fully completed. They also consider that the reporting and reviewing officers keep on
making liberal recommendations and placing demands on personnel departments without appreciating the organisational constraints. The top management
are not satisfied because the efforts and costs involved in implementing performance appraisals are seldom commensurate with the enhancements in the
quality of personnel.

Despite all the above misgiving it is extremely difficult, if not impossible, to totally do away with appraisal systems. It is therefore, essential to appreciate and
understand the barrier to effective appraisal of performance.

Many serious problem areas hinder accurate and objective measurement of employee performance. These problem areas (barriers) can be broadly classified
into two main groups -i.e., Technical Barriers and Human Barriers. The technical problems are many and may appear to be more complex than the human
problems. There are also continuous and critical interactions between the two groups of problems. In the long run, however, it may be far easier to solve
technical problems than it will be to overcome the human problems.

Technical Barriers

Some of the major technical problems that one may encounter are:

a. Accurate and precise description of job content.

b. Identification and weighting of relevant performance dimensions and establishment of performance standards.
c. Measurement processes and rating instruments that appropriately relate to the multi-dimensionality of work and accurately reflect the kind of work
and results expected of the ratee.
d. Use of raters who have the opportunity and ability to observe, recognize and measure specific aspects of performance.
e. Timing of performance rating.
f. Training of all involved personnel, particularly the raters, leading to a more effective performance appraisal program.
g. Establishment of an effective monitoring and auditing system that can assist in quickly identifying and correcting performance appraisal system
deficiency.
h. Provision of information systems that can quickly store, retrieve, analyse and disseminate relevant appraisal data to concerned parties /
departments.
i. Establishment of appeals set up and procedures that enable all ratees due process protection.

Human Barriers

Possibly the most critical barriers to accurate and objective measurement of employee performance lie deep within the genetic and learned makeup of all
people. A wide variety of emotional, psychological, intellectual and physical problems that, at first glance, may appear to be separate and irrelevant, may
combine in any number of ways to completely neutralize the appraisal process.

The main issue that concerns or should concern the management is "How to give each employee his due?" It is here that different human elements come into
play. To illustrate the point, no two reporting officers have the same standards in appraisal. The content and quality of their appraisal will depend upon their
capability and motivation. Let us look at the fig. 4.1.
You would notice that correct appraisal will only be possible when the rater has both the high ability and high motivation. This is rare and even then the
standards of appraisal will vary from rater to rater.

To better appreciate the extent and depth of these human problems, let us identify and analyse these from the perspective of those who are involved in the
appraisal process i.e., ratees, raters, reviewers, administrators of appraisal processes and users of appraisal data.

RATEE CONCERNS (APPREHENSIONS)

Almost all employees (except perhaps a small number of outstanding / poor performers) are wary of performance ratings. Possibly the most common ratee's
concern is that of rater subjectivity. What worries them is that the rater will not objectively measure his or her performance on the actual results achieved and
the behaviours demonstrated, but will instead be influenced by a variety of subjective biases. Ratee's also feel that those who perform certain kinds of work or
have jobs in certain areas may receive unwarranted high or low appraisal ratings.

Some of the major ratee concerns are:

a. Non - Performance - Related Influences

These concerns stem from the fears that the performance ratings given by the rater will be unfair and subjective due to considerations other than
job-related aspects like sex, race, state of origin, age, religion, old association or even on physical or psychological makeup.
b. The 'Average' Issue
Over the years the word "average" has acquired a negative connotation to majority of people. An 'average' rating is perceived as "mediocre", or less
than acceptable for promotions and good assignments. This in turn, means that raters are faced with an emotional problem when rating their
subordinates as 'average' and then with a mathematical incongruency when rating the majority of their subordinates as "above average".
c. Job Security and Long-term Survival
Most appraisal systems are designed to measure short-term results. The managers at the highest level, primarily responsible for the long term
direction and growth of the organisation, due to their mobility and opportunities for other better jobs, are comparatively immune to performance
appraisals. Their commitment to the organisation and appraisal process is, therefore, likely to be short term. On the other hand, for middle and lower
level managers and employees, the performance rating have direct and most potent influence on their job security and long term survival in the
organisation. This concern with their future immensely influences their view and perception of any appraisal system. Even one poor or unacceptable
rating could result in an adverse decision for the ratee for future life.
d. Abuse
Many employees fear the possible physical and emotional abuse of performance ratings by their peers or even superiors. A high rating could be
perceived by peers as a "Rate buster" or a threat in competition. A superior on the other hand could exploit a subordinate in many ways with
promises or indications of higher ratings.
e. Some Other Ratee Concerns
 These concerns could be due to many unanswered questions in the minds of ratees regarding his superior. These are:
i. Will my superior be fair?
ii. Does he fully know the requirements and constraints in my job?
iii. Will he recall all my achievements or will he remember only my short comings and failures?
iv. Does he know me sufficiently?
v. what does he expect from me?
vi. what are his standards?

These concerns and apprehensions result in different kinds of RESPONSES and REACTIONS from ratees. Some of these could be:

a. Attempts to please the superior in many ways.

b. Best behaviour nearer the end of the reporting period.
c. Highlighting achievements.
d. Hiding / covering up mistakes and failures.
e. Apathy towards work and organisation.
f. Distrust / anger at the unfairness of the appraisal system.

RATER CONCERNS

Raters too, like the ratees, have their own concerns and apprehensions which influence appraisal. Some of the major
behaviour-influencing concerns are:

a. Desire to be accepted.
b. Concern with job security.
c. Concern for self-protection.
d. Affiliation with those holding similar views or having similar qualities or belonging to the same caste, same school or same
religion etc.
e. Own limitation due to lack of prior education, previous experience or developed skills.
f. Fear of playing God.

Desire to be accepted: The need for social affiliation may be stronger in some individuals than in others. But each person requires some kind of social
interaction and underlying any successful interaction is the feeling of concern, comradeship and a desire to be accepted by the group. The rater may,
therefore, avoid giving a poor rating to his subordinate for fear of non-cooperation, loosing team spirit or straining the relationship.

Concern with job security: All manager / supervisors are aware that their success depends on the cooperation, effort and contributions by their subordinates.
If in the appraisal process they inappropriately rate certain employees, the performance of the entire work unit may suffer. They also realise that their job
security and the performance of their work unit go hand in hand.

Concern for self-protection: For many people, performance rating means a possible change of status and life style in future. Subordinate's response to an
adverse or unsatisfactory rating can vary from mute acceptance or absolute indifference to becoming so distraught that he or she may indulge in abusive calls,
active hostility and even could commit suicide or murder. Very few raters would like to be in such a position and although the chance for such drastic action is
very unlikely, concern for violent ratee reactions often influences appraisal ratings.

Affiliation with those holding similar views or having similar qualities: It is always easier to relate to people who have similar perspectives. Race, sex,
religion, place of origin, language, educational background, location of residence and even physical characteristics all influence perspective. Such affiliations of
rater could perhaps result in higher appraisal ratings to those subordinates who possess similar perspective than those who do not. These differences often do
not arise because of specific conscious action but may result due to subconscious minimization of unacceptable activities of the subordinate who is considered
similar and a subconscious over reaction to those who are considered dissimilar or who hold different views.

Own limitation due to lack of prior education, previous experience or developed skills: Raters are only human and may have their own limitations which
adversely effect their ability to rate accurately and objectively. These limitations could be :

a. Lack of prior education, training, experience or skills.

b. Being human, they remember best what occurred most recently.
c. Lack of in-depth knowledge of the rater about the ratee's job and its requirements. This aspect is particularly relevant in high technology jobs.
d. Lack of opportunity to observe all or even a significant sample of ratee's behaviour and work place contributions.

Fear of playing God: Many raters feel that they should not have to bear the brunt of the adverse effects resulting from the formal written appraisal of ratee's
performance. Questions like "He will lose his job or will not be promoted" if, I rate him again as "average", often influence raters to be lenient in formal ratings.

TYPICAL RATER ERROR

The above discussed rater concerns and apprehensions result in various kinds of errors that contaminate performance ratings. Some typical errors are
discussed here.

Halo Effect: Basing the entire appraisal on the basis of one perceived positive quality, feature or trait and giving that employee higher than deserved rating on
other qualities. A subset of the Halo Effect is the "Logic Error". For example, an employee demonstrates a high degree of "Dependability" (completes his tasks
correctly and timely and is never late or absent) and from this behaviour, a comparable high degree of 'Integrity' (never uses organisational property for
personal use) is inferred.

Horn Effect: It is the opposite of Halo Effect. It implies rating a person low in one quality, which in turn influences the rater to give a
lower-than deserved rating in other qualities. For example, a subordinate is seem coming late to the office (punctuality) may be inferred as poor dependability
(does not complete his work in time).

Initial Impression: Rating based on first impressions and failing to recognise most consistently demonstrated behaviours during the entire appraisal period.

Latest Behaviours: Rating is influenced by the most recent behaviour and failing to recognise the most commonly demonstrated behaviours during the entire
appraisal period.

Spillover Effect: Allowing past performance ratings to unduly and unjustly influence current rating. The employee who has done
good / bad work In the past may be given similar ratings for the current period, although demonstrated behaviours do not deserve the rating, good or bad.

Status Effect: Over rating employees in high profile jobs or jobs held in high esteem and under rating employees in the lower-profile jobs or jobs held in low
esteem.

Central Tendency: Providing a rating of 'average' or around the mid-point of the scale for all qualities. This is the most common but serious kind of error. Most
appraisal systems require the rater to justify 'outstanding' or 'very poor' ratings. So, a rater may take a safer course and say to himself "Better rate most people
around the 'average' so that I do not have to justify or clarify".

Strict or Lenient Rating: Rating consistently lower or higher than the normal or average being overly harsh / lenient in rating performance qualities.

Stereo Typing: Stereo typing is a standard mental picture (perception) that a rater holds about a subordinate because of that person's sex, caste, age,
physical characteristics or place of origin etc. stereo typing result is an over simplified view of the individual and may blur the rater's assessment of the person's
performance on the job.

Same as Me: Giving the subordinate a rating higher than deserved because the person has qualities or characteristics similar to those of rater (or similar to
those held in high esteem). For example, a rater who is good golfer may tend to rate a golfer subordinate favorably.

Different from Me: Giving the subordinate a rating lower than deserved because the person has qualities or characteristics dissimilar to the rater (or similar to
those held in low esteem).

Improving the Accuracy of Ratings: The rater concerns and errors can be minimized by:

a. Developing well-defined performance factors and criteria.

b. Focusing attention on behaviours over which the ratee has greatest control.
c. Improving familiarity of the raters with the observed behaviour.
d. Insisting that raters document behaviours to help improve recall.
e. Preparing a check-list to obtain and review job-performance related information.
f. Conscious efforts to minimize personal biases.
g. Imparting accountability for ratings and review.
h. Arranging for rater feedback.
i. Tieing up ratings with actual performance of units under rater’s control.
j. Arranging training to raters covering, among others, each of the above aspects.

REVIEWER CONCERNS

The monitoring of the appraisal ratings normally starts with the immediate superior of the rater. He has the initial and a major responsibility for identifying rating
weakness, biases and even inaccuracies. The ability to do a good review requires reasonable understanding of the work performed by the ratees, some
knowledge of both the raters and ratees personalities and even a good recall of past ratings and distribution of ratings given by the various raters whose
ratings are being reviewed.

Some other major concerns of reviewer are:

a. Time Constraints: The issue of time availability is applicable to the reviewers as it does to the rater. Rating and reviewing
 performance ratings, if done properly can consume a lot of time. Besides his own job requirement how much time can he spare
for review. Lack of time can adversely effect the quality of review.
b. Comparison Capabilities: In addition to the time problem, the ability to analyse the rating given by the rater by using a series
of comparison is an important aspect of a good review. This requires an effective support system that can store, analyse and
retrieve information in a quick and cost-effective manner (computer based information system). When this kind of information
(e.g. past ratings given by the rater to the ratee, distribution of ratings given by the raters etc.) is not readily available to the
reviewers, they have to depend on memory and all of the problems related to human recall.
c. Ability and Motivation to Review: Like the rater, if the reviewer either lacks the ability and experience or lacks motivation, he
is likely to take the course of action which requires least effort. If the reviewer feels that the organisation is going to make
minimal progressive use of ratings, why spend the time and effort carefully reviewing each rating? Just sign on the dotted line
and send it forward.

ADMINISTRATOR CONCERNS

Administrators, who are usually members of the human resources department, have their own experiences with previous appraisal systems. If their
experiences have not been positive or if they have been victims of past appraisal failures, they tend to become cynical and disenchanted. In such cases they
view the current appraisal system as yet another exercise in futility. This perception can only lead to trouble for all involved in the appraisal system. This lack of
trust in the system by administrators leads to:

a. Lack of realisation of human concerns at various phases of the appraisal process.

b. Inadequate job-content foundation.
c. Insufficient training to all involved parties regarding appraisal system.
d. Lack of acceptance and credibility of performance appraisal.

USER CONCERNS

Besides the ratees, raters, reviewers and administrators who are actively involved in implementing the appraisal process, there are many other end users of
the data generated by the appraisal system. These are the individuals who are involved in organisational planning, compensation administration, training and
development and employee movement decisions. It takes little time or effort for ratees, raters, reviewers and administrators to become aware that little or no
credence is given to appraisal ratings. When this happens, ratees and raters, those most influenced by appraisal ratings, will frequently do everything in their
power to destroy or subvert the system. Some time the users too make unreasonable demands on the system in the form of information and data from the PA
system or ignore the actual data provided by the system. The credibility of the system becomes suspect. In the net analysis the impact of weaknesses and
deficiencies in a performance appraisal system accumulates geometrically rather linearly.

SALIENT PROBLEMS IN PERFORMANCE APPRAISAL IN INDIA

A summary of various studies conducted in India revealed the following problems in the prevailing performance appraisal systems:

a. Organisational requirement oriented.

b. Often judgmental.
c. Vulnerable to rater biases and errors.
d. Inadequacy of quantifiable and measurable criterion.
e. Assumption that one psychological configuration makes the best executive.
f. Relation between traits assessed and performance doubtful.
g. Appraisers have no or little responsibility for development of subordinates.
h. Inadequate formal training to appraisers in appraising.
i. Reporting officer's ability to judge a subordinate is taken for granted.
j. Attributes for appraisal generally too many.
k. Credibility of system often suspects.
l. Appraisal forms lengthy and time consuming.
m. Performance counselling is poor.
n. Involvement of ratees is minimal.
o. Scarcity of job opportunities and unemployment leads to abuse of system.
p. Difficulties connected with negative appraisal are too many.
q. Majority ask for an open system -yet mentally neither prepared nor trained for it.
(Trend to make appraisal more result oriented).

IDENTIFYING HUMAN PROBLEMS IN APPRAISALS

To identify problems in a performance appraisal system, the logical first step should be to get feed back from those who influence and are influenced by the
appraisal process. Asking the right questions, then obtaining honest, complete and accurate responses from all concerned will immensely help in appreciating
the problems and finding a workable solution. These responses will assist designers and administrators to recognise the constraints within which they must
function.

In the end, it must be said that formal appraisal system are neither worthless nor panaceas for all organisational problems. A formal appraisal system is, at the
very least, a commendable attempt to make visible and hence improvable, a set of essential organisational activities. By improving the probability that good
performance will be recognised and rewarded and poor performance corrected, a sound appraisal system can contribute both to organisational morale and
organisational performance. The alternative to a bad appraisal program - need not be NO appraisal program at all BUT a better appraisal program and the first
step in that direction is matching of practice to purpose.
Chapter 5 : PERFORMANCE COUNSELLING

COUNSELLING

In general, counselling, as a human relations technique, is extremely useful for effectiveness in managing human resources. It refers to a process of advising
an employee or preferably in most cases, listening to his problems and enabling him to find from his own reflection and talking a solution which is satisfactory
to himself. It therefore, relates to a method of understanding and helping people who are upset emotionally. These emotional difficulties / problems excludes
serious mental illness.

The need for counselling stems from the complexity of human mind. It is almost impossible for any human being to always have an optimal emotional balance.
However, the individual tolerance level to emotional problems varies due to individual differences. Suppression of emotional problems can lead to low morale
and reduced performance and therefore, management can ill-afford to ignore it. Today, the need for counselling may arise from varied on-and off-the-job
conditions such as dissatisfaction, resistance to change, alienation, frustration, conflict and stress.

Counselling therefore, covers the six functions i.e., advice, reassurance, communication, release of emotional tension, clarified thinking and re-orientation.
Maier N.R.F. in his book "Psychology in Industry" indicates following seven accomplishments of good counselling:

a. Identification of attitudes and values.

b. Reduction of frustration.
c. Location and acceptance of true problems.
d. Stimulation of problem solving
e. Development of responsibility.
f. Conformity of solution with value system, and
g. Availability of expert knowledge.

PERFORMANCE COUNSELLING

Performance counselling, at times is misunderstood as a process of "correcting and controlling" the employee's behaviour. In this line of thought some
executives consider that counselling is required when an employee makes mistakes or becomes un-cooperative or becomes a problem case.

Performance counselling is neither 'clinical counselling' nor 'psychotherapy'. Performance counselling is normally done in regular course of performance even
when there are no problems. It focuses on the entire performance (tasks and behaviours) during a period rather than on a specific problem. However, specific
problems may be discussed during counselling as a part of analysing and for further improvement of performance. Though normally, performance counselling
should take place at least once in a year as an integral part of the appraisal system, it is advisable to have performance discussions quite frequently depending
upon the needs of individual employee. In fact, the more attention a manager pays to counselling his subordinate, the more time he is likely to gain in the long
run due to improved capabilities of his subordinates.

Performance counselling is a dyadic process. It is based on the relation between two persons, a manager who is providing help or who is counselling and an
employee (subordinate) to whom help is given. Performance counselling sometimes is also called "Coaching" but the word "Counselling" is a much wider and
appropriate term for such a process.

OBJECTIVES OF COUNSELLING

Counselling aims at development of the counsellee and for better performance. The following could be considered as objectives of performance counselling:

a. Providing him an empathic environment and opportunity for sharing and discussing his tensions, conflicts, concerns and problems.
b. Helping him to better understand himself -his strengths, weakness and potential.
c. Helping him to acquire greater insights into his demonstrated behaviour and its repercussions.
d. Helping him to have a better understanding of his environment.
e. Increasing his personal and inter-personal effectiveness by giving him constructive feedback about his behaviour and assisting
him in analysing his interpersonal competence.
f. Helping him to review in a non-threatening way his progress in achieving various objectives / goals.
g. Encouraging him to set future goal for further improvement.
h. Discussing with him the expected organisational support in achievement of his goals.
i. Encouraging him to generate alternatives for dealing with various problems.
j. Helping him to develop various realistic action plans for further improvements.

CONDITIONS FOR EFFECTIVE COUNSELLING

Counselling, can be a very effective instrument for integrating employees with their organisation. However, it needs to be done in a conductive environment.
The following conditions are considered essential for counselling to be effective.

a. A climate of Openness and Mutuality -If the working environment in the organisation is full of tension and lack of trust, counselling can not be
effective.
b. Helpful and Empathic Attitude of Management -If the management in general and counsellor in particular does not have a helping attitude
towards the counsellee, counselling can not be effective.
c. Sense of Uninhibited Participation -Counselling is NOT a one-way process but a dialogue in which the counsellee must feel free to participate
without any inhibitions and fear of fall-outs.
d. Collaborative Relationship in Goal Setting and Performance Review. The thrust of discussion between the counsellee and counsellor in both
aspects of performance review and goal setting must be collaborative and NOT for fixing responsibilities on counsellee for the shortcomings.
e. Focus on Work-Related Behaviour and Problems. Performance counselling is meant for improving performance. Focus, therefore, must be kept
on work-related aspect of problems and behaviours and not shifted to personal and general personality problems.
f. Avoidance of Discussion on Salary and Rewards -Discussions on issues of relationship between performance and rewards can vitiate the main
purpose of counselling.

APPRAISAL DISCUSSION

The formal process of counselling in an organisational setup has been called by many terms (names) such as "Professional Counselling", "Performance
Counselling", "Performance Appraisal Counselling", "Interview", "Performance Appraisal Interview", "Appraisal Interview" and "Appraisal
Discussion". Keeping the purpose and the nature of dialogue the author prefers to henceforth term it as "APPRAISAL DISCUSSION".

Appraisal Discussion enables a perspective to be obtained on past performance as a basis for making plans for the future. Therefore:

a. Obtaining historical perspective through joint analysis is a necessary part of an Appraisal Discussion, but
b. Reaching agreement about "What should be done in the future" is what the discussion is really all about.

Rationale of Appraisal Discussion

Appraisal discussion, therefore, constitutes a very important and critical aspect of an appraisal system. Five Key Elements of performance appraisal which can
be achieved through an effective appraisal discussion are:

a. Measurement of Performance: Assessing results against agreed targets and standards.

b. Feedback: Giving the appraisee information and constructive feedback on how he has been doing.
c. Positive Reinforcement: Emphasing what has been done well so that it will be done even better in the future, making only constructive criticism i.e.,
those that point a way to improvement.
d. Exchange of View: Ensuring that the discussion involves a full, free and frank exchange of views about:
i. What has been achieved?
ii. what needs to be done to achieve more?
iii. what appraisee thinks about his work, the way they are guided and managed and their aspirations and expectations?
e. Agreement: Reaching an agreement for the future is the core and the ultimate purpose. It means jointly coming to an understanding about what has
to be done by both parties to improve performance and overcoming any work-related problems raised during the appraisal discussion.

WHAT CONSTITUTES GOOD COUNSELLING

What aspects make counselling effective? How to conduct an appraisal discussion? These are some of questions which need to be addressed. For this we
need to understand the sub- processes involved in counselling.

There are three main sub-processes involved in counselling -communication, influencing and helping. The sub-processes of counselling are shown in fig. 5.1.
Communication involves receiving messages (listening), giving messages (responding) and giving feedback. Communication can only be possible if both the
parties (counsellor and the counsellee) are empathic to each other and try to understand each others' point of view. Non-verbal communication is as important
as verbal communication.

The Sub-Processes of Counselling

Influence simply means making an impact on the other person in relationship. Usually influence is understood in the sense of restricting the autonomy of the
person and directing him into channels desired by the person who is influencing. This is sometimes also called 'direct mode' of influence. In appraisal
discussion / counselling the desired influence is just the opposite, sometimes also called as 'indirect mode' of influence (which increases the autonomy /
freedom of the other person). In this indirect mode, influence is affected by recognising feelings, expressing feelings, acknowledging and praising good ideas
given by the counsellee and raising questions which promote thinking and explorations. This special type of influence enables the other person to exercise
more autonomy, provides positive reinforcement and creates conditions in which the counsellee identifies himself with the counsellor.

Helping, the third sub-process, involves three elements i.e., Empathy, Mutuality and Development. Without the counsellor's concern and empathy for the
counsellee, effective helping in the counselling session can not be provided. It is also based on mutuality of relationship, whereby, both the counsellor and
counsellee feel free to ask for and provide help to each other. Finally, helping involves identification of developmental needs of the counsellee so that he may
be able to develop and increase his effectiveness.

KEY ASPECTS OF CONDUCTING APPRAISAL DISCUSSION

Counselling is primarily meant for helping an employee to grow and develop in the organisation, so that he can contribute optimally for the organisational
growth. While every manager is counselling his subordinates knowingly or unknowingly in his day-to-day work life, an effective counsellor-manager is the one
who can make his subordinates more aware of their strengths and weaknesses and help them grow in an environment of mutual trust, concern and supporting
organisational climate. Counselling therefore, requires certain interpersonal skills and planned preparation if a manager is genuinely interested in developing
his subordinates.

Good managers counsel their employee regularly in their jobs whenever a necessity arises. However, annual appraisal discussion provides formal opportunity
for formal counselling. This formal counselling process passes through broadly four stages which needs to be noted. These are Preparation, Rapport Building,
Exploration and Action Planning. While the suggested activities during each stage are discussed in the subsequent paragraphs, it must be noted that there is
"NO ONE RIGHT WAY". Approaches to be adopted are immensely influenced by the circumstances, personalities, attitudes and the existing organisational
climate.

Preparation

Appraisal Discussion is too important and serious to be left to chance. The appraisers should not enter a appraisal discussion session unprepared. They
should know what they want to learn and points they want to make. They should neither go into a discussion with preconceived conclusions nor expect to
follow some well defined order of events, rather they should be able to combine their plans with improvisation as it becomes necessary. The ratee should also
be given the same consideration. Days or possibly a week or two prior to the scheduled appraisal discussion, the ratee should be notified of the time, date, and
place of the scheduled discussion. The appraisal discussion will be more informative and constructive when both parties have had ample time to do their
homework. The immediate superior must realise that the time and effort the superior spends with his or her subordinate in reviewing performance can have
both short and long term benefits that far exceed the cost and effort of preparing and conducting an appraisal discussion.

We could point-wise summarize the 'Preparation' stage into following steps:

 a. Setting up the Meeting
o Advance notice to the appraisee regarding time, date and venue.
o If possible have a word with appraisee regarding points from appraisee, positive nature of the process and possible future plans.
b. Preparation by the Appraiser
o Advance homework to gather all information that has meaningful bearing on the discussion.
o A stock-taking of good and bad performance and behaviour of the ratee during the year.
o Clear but flexible structure of discussion.
o Prepare a check list of questions to be asked and development needs of appraisee.
o Draft content of performance agreement.
o Expectations of support from both sides.
c. Preparation by the Appraisee
o Advance homework to list out positive and negative contribution.
o Expected support required from each other.
o Development needs.
d. Physical Setting (Location) of Appraisal Discussion
o Site conducive to discussion success.
o If possible a private room with comfortable chairs.
o No Desk / Table or other barrier between rater and ratee
o Total confidentiality-preferably with no outside interruptions.
o Even tea / water may be provided.

Rapport Building

Having done our homework during the preparatory stage, we now move on the next stage i.e., Rappor1 Building. To begin with, the appraiser must appreciate
the importance of the appraisal discussions and should NOT have the attitude of merely going through the motions. The appraiser must allow sufficient time to
conduct the discussion. Because of both the importance and sensitivity of the discussion, it is not appropriate to cancel / postpone the discussion or even to
make an appraisee wait because of other job requirements.

Rapport Building is essential for any effective counselling outcome. This entails generating confidence in the employee to open up and frankly share his
perceptions, problems, concerns and feelings. The counsellor-manager also needs to level himself with the employee and tune himself to his orientation. Let
us briefly go through some of the sequential steps in rapport building.

Opening / Attending

The ratee frequently enters the session apprehensively. The rater should put ratee at ease as quickly as possible. A moment or two for some light conversation
such as "Congratulation on your son Mukesh's selection for MBA" will help in breaking the ice. There should be a brief dialogue about what is to be
accomplished during the session. The agenda for the session should also be shared with the ratee, if not already done in advance. Simple statements like '"
would like to share my observations with you and would appreciate your suggestions that might aid my perceptions" will go a long way in obtaining ratee's
participation. Inviting rituals like offering a chair, closing the door to indicate privacy, asking the secretary not to disturb or not to pass on the telephonic calls
during the meeting may indicate that the counsellor is attending to the counsellee. However, all such rituals should come out of the genuine concern and
attempt for full attention to the employee during the counselling session.

Listening

Listening is the first effective step in communication and hence, effective counselling. It is important to listen to what the employee says, as well as to his
feelings and concerns. Physical posture (e.g., leaning forward) and keeping eye contact with the employee are indicators of listening.

Acceptance

Establishing a climate of acceptance is another important aspect of building a rapport. The employee must feel that he is wanted and that his counsellor is
genuinely interested in understanding him as a person and not merely as a role or a position in the organisation. The counsellor communicates this to the
employee by listening to all the problems and concerns of the employee and communicating back to him that he is listening. This he does by paraphrasing,
mirroring or reflecting what the employee has said. For example, if an employee says, "I am very frustrated. I have tried to do my best in the past year. I have
worked twice as hard as anyone else in the office. But I never got any promotion". The counsellor could reflect back and say, "I see your point, you feel that
your superiors have not shown due recognition for your hard work". This would help the employee feel that he is being understood and that his counsellor is
interested in him. Such reflections build a climate of acceptance and facilitate the process of building a rapport.

Conducting the Appraisal Discussion

During the discussion, a flow of questions, responses, unsolicited statements and probably many non-verbal communications contribute to the success of the
discussion. In addition to identifying the information to be provided and asked for, the rater can increase the probability of success by employing empathy,
maintaining objectivity, minimizing secrecy, and utilizing keen observation and constructive criticism. These will encourage the ratee to be more comfortable
and possibly more confident. A difficult but important perspective that the rater must maintain is to be as fair and impartial as possible. Facts must be the basis
for performance -related decisions. Personal feelings and prejudices must not be allowed to cause the distortion of facts or their unjust use.

So far, we have discussed the initial preparation for the discussion, the rapport building and the guidelines to be observed during the conduct of the discussion.
All these are desired to identify the problems and arrive at a mutually acceptable course for action for improvement. It is far more rewarding if the employee
perceives ownership of these. This is often referred to as "EXPLORING".

Exploring helps an employee to search various dimensions of the problem or discover unidentified or unnoticed related issues. This is done by using questions
and suggestions to the employee to talk more on the problems and concerns, he mentions. With tact and encouragement, the counsellor should lead the
employee to identify the real problem (problem identification) and generate alternative causes of the problem. This should result in proper diagnosis of the
problem mentioned by the employee.

Action Planning

Good appraisal discussion must result in specific plans of action for the development of the employee and his improved performance. Identifying a training
need, job rotation, sponsoring for further training, increased responsibility, enhanced management support are some of the likely outcomes in such action
plans.

Three distinct aspects which can be identified in "ACTION PLANNING" are:

a. Generation of Alternatives (Searching). In this the employee is encouraged to think and brainstorm the alternative ways of dealing with the
problem(s), earlier identified and diagnosed by him. The counsellor at a later stage may also add his suggestions. However, primarily the
responsibility should rest on the employee himself.
b. Decision-making: After the alternatives have been generated, the counsellor may assist the employee to evaluate all alternatives, raise questions
on the feasibility of various alternatives and help in selecting the best option and finalising an action plan for implementation.
c. Management Support: In the end both should agree to the support plan, particularly from the management and the counsellor, in implementing the
agreed action plan. This should include monitoring the action pIan and the required follow-up.

CLOSING AND SUMMATION

Before closing the discussion, it is imperative to check complete understanding regarding all aspects of the discussion. There should not be any
misunderstanding or chances of either party saying "But I thought you meant this". It is therefore, necessary for the counsellor to summarize:

a. What happened -major aspects?

b. What has been agreed to? i.e.
o Action plans.
o Support in implementation of the plan.
o Monitoring and follow up action
c. What recommendations are to be made?
d. What should take place from now until the next appraisal discussion?
e. End on a positive note.

RECORDING THE APPRAISAL DISCUSSION

Soon after the conclusion of the appraisal discussion, the rater should record all pertinent information. These records may prove to be invaluable in preparing
for future appraisal discussions, for analysing what happened during this discussion, for establishing future job requirement and standards and the aspirations
and expectations of the employee at some future date.

Some of the aspects which should be considered for recording are:

a. Key points of discussion.

b. Problems identified for improvement.
c. Agreed action plan for the coming year.
d. Support expected by both parties.
e. Follow-up action of both parties -summarize action points by both.
f. Personal reactions and impressions of exhibited behaviours.

CHECKLIST -SKILLS FOR CONDUCTING APPRAISAL DISCUSSION

When conducting an appraisal discussion, the following mental checklist can be useful to a counsellor:

a. Do your homework in advance.

b. Be relaxed and put appraisee
c. Focus on work place problems, not personality.
d. Use facts, not opinions.
e. Provide feedback in a non-threatening manner.
f. Refuse to accept responsibility for ratee's behaviour.
g. Establish rapport
h. Keep to one point, one subject at a time.
i. Provide useful information in understandable amounts at appropriate times.
j. Promote self review, self assessment by the ratee.
k. Must ensure full understanding on the joint action plan for the future.
l. Summarise what happened and what should take place in future before concluding the discussion.
m. Record the salient aspect of discussion at the earliest.
Chapter 6 : DESIGNING AND INTRODUCING A PERFORMANCE APPRAISAL SYSTEM

INTRODUCTION

In this chapter, it is intended to provide guidelines for developing and introducing a performance appraisal system in an organisation. These guidelines may be
useful to (a) Organisations which do not have a formal appraisal system, but may need one, and (b) those which are not satisfied with their present appraisal
system and wish to develop a more effective one.

Before we go into the details, a word of caution will be in order. Every organisation has its unique characteristics, its own culture, its own problems and special
needs. Each organisation, therefore, must develop its own organisation specific performance appraisal system. There can not be a set piece or standard
model to suit all organisations. Let us go through various steps which are essential for development and introduction of performance appraisal system.

STEP ONE

Develop a management commitment and ownership of the new performance appraisal system. Without this, the effectiveness of even a good system may be
severely retarded.

STEP TWO

Determine an overall approach to performance appraisal system. This would include decisions on the following aspects by the senior management.

a. Objective / purposes of the system i.e., administrative, developmental, etc.

b. Benefits anticipated and linkages with other human resource sub-systems in the organisation.
c. Main features of the approach to performance appraisal. Some of the aspects to be addressed are:
i. Rating system including review.
ii. Competencies desired on basis for appraisal.
iii. Appraisal discussion.
iv. Appraisal by results.
d. Who all to be covered - all employees or supervisors and managers only?
e. How and where to introduce performance appraisal?
f. Decide whether to use outside consultant?
g. Role of human resource department?

STEP THREE

Set up Project Team to go into the details, further develop the system, generate acceptability and present the entire system in totality to top management.

STEP FOUR

Consider the project team recommendations and after due brainstorming sessions, accord approval to the performance appraisal system. Special
consideration should be given to the following aspects:

a. Objective / purposes - inclusion of developmental objectives.

b. Appraisal by results and other dimensions of rating -e.g., traits, behaviours demonstrated, key result areas.
c. Rating system
d. Review and appeal
e. Appraisal discussion
f. Role of HR department.
g. Documentation
h. Linkages with other sub-systems in the organisation.
i. Training in appraisal skills
j. Pilot testing
k. Monitoring of the system

STEP FIVE

Pilot testing of the system and affecting modification. Implement the training programs and effectively communicate the system and its advantages to all
employees.
STEP SIX

Introduce the newly developed performance appraisal system. While doing so linkages with the existing performance system must be clearly communicated to
all. Top management must carefully observe the process and be willing to discuss its effects and changes, if required.

It must be appreciated that development and introduction of a new performance appraisal system is a slow, deliberate, step by step and carefully monitored
process. All employees need to be made ready to accept the new system. It is not uncommon to find organisations changing their appraisal system without
paying enough attention to the process of changing and landing themselves in trouble and quickly reverting to their old system of appraisal.
Chapter 7 : SELF APPRAISAL

INTRODUCTION

In most appraisal systems, the immediate superior, being the closest to the appraisee, is the most frequently and commonly used rater. Although the
immediate superior has the requisite performance -related knowledge, it is almost impossible for any one person to be completely aware of the multi-
dimensions of the employee's work performance, behaviours demonstrated and the impact of these behaviours on work-unit outputs. For this very reason and
to bring greater objectivity, the observations and measurements by others are desired to be brought into the system.

Among the various raters, other than the immediate superior, possibly the most important additional rater is the ratee himself. This appraisal of the employee
by himself about his own performance, strength and weaknesses is called SELF APPRAISAL. This self appraisal enables the immediate superior and the
subordinate to discuss their views on the rating of performance, demonstrated behaviour of both parties and to review and discuss the current work activities
and assignments.

PURPOSE OF SELF APPRAISAL

Behavioural scientists have established beyond doubt that change is faster when it is self- initiated. If an employee has to improve or do better, he must feel
the need to do so. Self appraisal enables an employee to reflect and review one's own performance and makes him more aware of his own strengths and
weaknesses. He is more likely to analyse the causes of his success and failures and to prepare his development plans. Self appraisal and subsequent
discussion with his immediate superior thus provides one such formal opportunity to review his own performance and growth over the entire appraisal period
(normally one year).

The following can be considered as the purposes of self-appraisal:

a. To provide a formal opportunity for the employee to recapitulate:

i. Various activities undertaken in relation to his job.
ii. His achievements and failures.
iii. The capabilities and behaviours demonstrated and capabilities he felt as lacking.
b. To identify his own development needs and support required from the organisation particularly his immediate superior.
c. To communicate to his reporting officer his contributions, accomplishments and reflections to enable him to view his (appraisee’s)performance in the
right perspective and assess more objectively.
d. To initiate an organisation - wide process of review and reflection and supportive climate.

There is no standardized or prescribed format for doing self appraisal. Some organisation use a separate self appraisal form and some do not. The content of
self appraisal vary widely among the organisations. Self appraisal goes well with the organisations which practice MBO as a formal discipline or at least have a
system of goal-setting. A variety of self appraisal formats seem to be in use.

Those organisations which do not have the MBO or where no goals are set for individual employee, self-appraisal seem to be used for purposes of:

a. It serves as an aide-memoir to the appraiser; it can bring to his (appraiser) notice certain relevant facts which could have otherwise escaped his
notice or memory. It thus helps in producing a more balanced and objective report.
b. The Reviewing Officer can have two sets of performance information i.e., one produced by the immediate superior of the employee and the other by
the employee himself (self-appraisal). The Reviewing Officer can then check, compare and further investigate to arrive at a more balanced "Final
evaluation" of the employee.

However, it must be appreciated that in organisations where there are no clear criteria, goal setting or desired results (to be compared with), an employee is
unlikely to give, in a documented form, his own confessions, failures and weaknesses. In such cases
self-appraisals are more likely to be a large volume of self praise and irrelevant information.

SELF APPRAISAL - IT'S FUTURE

Self-appraisal is an important feature of performance appraisal system. Gradually, more and more organisations are introducing this as a part of their appraisal
systems. However, to be utilized effectively, both appraiser and appraisee need to take self appraisal seriously and with an open mindset. It provides a base
for a rewarding joining performance review, counselling, assessment of developmental needs and greater understanding. Otherwise it is likely to become a
fashionable ritual in performance appraisal.
Chapter 8 : 360 DEGREE APPRAISALS

INTRODUCTION

Performance appraisal is no doubt, a matter of great importance and concern to every employee. This is because most of the personnel decisions, which are
based on appraisal reports, are of immense significance to the professional and personal life of employees. Initially, most of the appraisal systems were
essentially trait-based and confidential. Their disadvantages and the resultant dissatisfaction arose mainly from factors like high subjectivity, lack of correlation
with job-related factors, isolation of appraisee from the system, single point (appraiser only) of initiation, perception as an instrument of control by management
and direct linkage with reward and recognition.

The efforts to achieve more and more objective appraisals have led to many organisations experimenting with new appraisal systems and combinations. The
new competitive environment, the rising aspirations and the increasing importance of human resources have all spurred the ideas of open systems, the self
appraisal, the thrust on developmental objectives, regular performance counselling and reviews of appraisals.

WHAT IS 360 DEGREE APPRAISAL?

360 Degree Appraisal is yet another progressive experiment in this direction to achieve greater objectivity in appraisals. 360 Degree Appraisals are
performance appraisal of an employee using multiple assessors or appraisers. All those who form the Role Set Members (i.e., those who have working
relationships with the appraisee) evaluate the appraisee once a year (or for a specified duration) on a standard format developed through careful research,
reflection and experience. These 360 Degree Appraisals are also called as "MULTI - RATER APPRAISALS". The appraisers are taken from the superiors,
subordinates, colleagues and other internal or even external customers and hence, the name 360 Degree Appraisal.

360 Degree Appraisals are supposed to be more objective, suit flat structures, enable better planning and management of performance, encourage quality
consciousness and are team work oriented and more participative.

TV Rao Learning Systems (TVRLS) had done a lot of pioneering work in the area of 360 Degree Appraisals in India. Their survey had indicated that though a
number of organisations (particularly multinationals and joint ventures) have started using this method, they are limited to senior management level and have
developmental objectives and not linked to rewards fully.

ADVANTAGES AND DISADVANTAGES

From the experience gained so far, the following advantages and disadvantages become obvious:

a. Advantages
i. Provides a more comprehensive view of an employee's performance.
ii. Are more objective being multi-rater based.
iii. Increases credibility of performance appraisal.
iv. Feedback from peers enhances employee's self-development.
v. Improves team work.
vi. Increases accountability of employees to their customers.
b. Disadvantages
i. Time consuming and administratively more complex.
ii. Extensive giving and receiving feedback can be intimidating to many employees.
iii. Requires extensive training and significant mind-set change effort to work effectively.

INSTITUTING A 360 DEGREE APPRAISAL SYSTEM

Effective 360 Degree appraisals are not knee-jerk judgments. They require utmost care and planning while instituting and implementing. Even when the data is
collected from various raters, it needs to be analysed and summarised for ratee's final performance report. Experience so far reveals that the feedback so
received cannot always be taken at face value. Both individual and organisational maturity is required to give and receive constructive feedback.

Therefore, any organisation which aims to introduce a 360 Degree Appraisal will need to address the following aspects:

a. Objective
o Developmental?
o Linkages with reward and recognition?
b. Levels and Scope at which to introduce
o Managers only?
o Supervisors?
o Selective managerial appointments only?
 o All levels?
c. Number of raters -(Organisations have experimented with 6 to 16)
o Fixed?
o Variable (with levels and appointments)?
o Minimum number?
d. Internal and / or external raters.
o Proportion (if mixed)
e. Who is to decide choice of raters?
o Management only? or
o Both Management and Individual?
f. Method of final evaluation - once the appraisal from different raters is received.
g. Format for appraisal.
o Same for all raters?
o Different for superiors, colleagues, subordinates and external raters?
o A focused feedback questionnaire - from who all?
h. Manageability.
o Time and effort expected?
o Administrative details for effective implementation?
i. Linkages with existing performance appraisal system.
j. Organisational culture.
o Needs to be suited to 360 Degree appraisal?
o Change of mindset

It is therefore, essential that organisation develop an effective plan and mindset change process before they introduces 360 Degrees Appraisal. Following
steps are suggested for institution of the 360 Degree Appraisal:

a. Top management be fully convinced and own it and then clearly communicate the goals of 360 Degree Appraisal and how it relates to the
organisation's business strategy and competitiveness.
b. Top management must appoint a committee of representative managers and employees to develop the appraisal process and forms.
c. Provide training to employees on the new appraisal process instruments and its advantages etc.
d. Train raters on how to give constructive feedback in a productive and non-critical manner.
e. Train ratees to receive feedback in a positive manner. Where most organisations fail is that they don't do enough and correct training in receiving
constructive feedback and how to deal with it. It needs to be recognised that "If we don't take it (feedback) well, people stop giving it".
f. Develop an effective change process for all to change mind set and orient the appraisal system to the organisations specific needs and culture.
g. Pilot test the proposed appraisal system with a select group of employees before instituting it elsewhere in the organisation.
h. Link the proposed appraisal system to the organisation's reward and recognition system. This would provide the added motivation for employees.

By now you would have appreciated that 360 Degrees Appraisal significantly differs from the traditional superior - subordinate performance evaluation. Rather
than having a single person play judge, this system of appraisal acts more like a jury. 360 Degree Appraisals do provide a comprehensive view of the
employee's performance, facilitates greater employee self-development and provides a more formalized communication link between employees and their
customers. However, its success depends upon a changed mindset for "Feedback is hard to take and give. It's not always fun".
Chapter 9 : POTENTIAL EVALUATION

UNDERSTANDING POTENTIAL EVALUATION

Usually the performance appraisal and potential evaluation are linked together in majority of the organisations. Invariably almost the entire appraisal format is
devoted to appraise the specified criteria of performance and only a very insignificant part of the format relates to the potential. This may be in the form of "Is
he / she promotable". Frequently, the appraiser adopts a safe strategy by stating "Yes, in course of time". Indeed the decision on promotion may be based on a
very vague potential evaluation.

In some organisations the appraiser makes the assessment of potential, which is then reviewed by the appraiser's superior. In others, it is done jointly by the
immediate superior and the next superior. In yet other organisation, the evaluation of potential is made by the superior of the reporting officer, which is to be
finally endorsed by the latter's superior.

Some organisations, however, issue more elaborate instructions to the appraisers. lTC's instructions for example included:

"Identifying the assessee's potential must be done by the first and second appraiser together and on the basis of (1) Skills, knowledge, behaviours exhibited in
the past year while achieving his objectives, (2) Strengths and areas of improvement as identified, (3) Analysis of what the next higher job / different job (for
which he might be considered) entails, the requirement in terms of skills, knowledge, attitude and behaviour". It further clarifies that "Potential is identified from
the cumulative knowledge of appraisee generated over a period of time".

A study, similarly brought out that MMTC's guide lines for potential appraisal were as follows:

"For predicting potentials, please take into account (a) the quality of performance at the present level, (b) demonstrated strengths and weaknesses, (c)
professional qualification, if relevant, (d) the nature of past experience, (e) age and the state of health, (f) requirements of knowledge, skills and personality
traits in other functions and / or at higher levels".

It can be seen that a large number of organisations rely heavily on the quality of present performance and also take into account specific 'personality traits' and
'managerial skills' for evaluating potential.

WHAT IS POTENTIAL?

Evaluating or assessing potential is quite different from appraising performance. Simply slated Performance refers to an individual's behaviours, skills, and
abilities in meeting the requirements of the job which the individual currently holds. On the other hand potential refers to the abilities present but not currently
utilized or not required to that degree in the present job as would be required in possible future higher jobs which the individual may hold. It refers to the
abilities to discharge higher responsibilities in future roles.

THE NEED FOR POTENTIAL EVALUATION

Though potential evaluation poses a number of problems, nobody has ever questioned the need for assessment of potential for vital personnel decisions. It is
in fact a pre-requisite to the very survival of an organisation. It is an important area because people have to be prepared to take up higher responsibilities. It
also helps in identifying 'high-fliers' and the 'dead wood' early. Some of the major areas where potential evaluation plays a critical role are:

a. Promotions
b. Transfers
c. Placements
d. Training and Development
e. Career Planning
f. Succession Planning
g. Salary Increases
h. Organisation Planning

ISSUES IN EVALUATING POTENTIAL

Measurement of an individual's potential to determine today what he could accomplish tomorrow is indeed a very challenging issue in performance
management. As K Ramachandran, Director and Sr. VP (Human Resource and Operational Policy), M/s. Philips India, observes - "People are like icebergs.
What you see above the surface (performance) is only a small part. A large part, the attributes needed to perform excellently in a future job, which I call
potential is not immediately visible. It is hidden below the surface". Although it is a very difficult task to uncover the iceberg, it is a pre-requisite to organisational
survival.
Peter F Drucker in "The Practice of Management" observed that "there is nothing quite so unreliable as a judgement on long range potential. Not only are few
of us reliable judges of a man, nothing, also, may change as much as potential". Devidre Gill in "Appraising Performance" expressed similar views when he
observed that "the idea that any human being can forecast with reasonable accuracy an individual's readiness for promotion beyond a year ahead is almost
certainly over-optimistic".

Therefore, time and again serious reservations have been expressed about the procedures which require managers to predict potential of their subordinates
by using judgement on the basis of their current performance. Therefore, there is no doubt that the evaluation of potential has its own unique problems and it is
much more difficult than the appraisal of performance, because it involves a prediction of the future which is, in any case, uncertain. Yet every organisation has
to make an assessment of potentials of its employees for the purposes of a variety of administrative and developmental decisions.

HOW TO ASSESS POTENTIAL

Despite the problems and observations of many scholars and managers regarding potential evaluation, in practice we still need to assess potential and do so
as accurately as possible. It was earlier believed that the assessment of an individual's career potential must be related to his competence in his present job.

However, this view has since undergone a change and it is now considered that performance appraisal in the present job, by itself, may not be adequate for
assessing potential. The two main reasons are:

a. Promotions to higher jobs generally require new skills and different patterns of behaviour than just increased amounts of his existing talents.
b. 'Discontinuities' of job requirements and environments limit the appraiser's capacity for predicting potentials. This means that if the requirements and
environment of the new / future job are significantly different from the appraisee's present job, than it would be difficult to predict potential on the
basis of present performance. Common examples of such promotions are from non-managerial to managerial positions or of technical personnel
moving into managerial jobs.

Another problem in assessing potential is lack of unanimity among experts as to which attributes are important for predicting potential. For example, The
Philips India, based on the potential appraisal system of Philips N V Holland, uses a 5-point scale from excellent to insufficient for the following four qualities for
assessment of potential:

a. Conceptual effectiveness
b. Operational effectiveness
c. Interpersonal effectiveness
d. Achievement motivation

South Western Bell Telephone Company, USA conducted a number of experiment to ascertain the right criteria for evaluation of potential. As a result of this
study the following criteria were considered essential for potential assessment:

a. Setting and achieving objectives

b. Development of subordinates
c. Problem-solving and decision making ability
d. Effectiveness with other work groups
e. Effectiveness under stress
f. Initiative

To overcome some of these problem some organisations particularly in US have used the "Assessment Centre" method and psychometric tests for assessing
managerial potential. The "Assessment Centre" method involves multiple assessment of several individuals by a group of trained appraisers, using a variety of
techniques such as simulations, psychometric test, group discussions etc. However, this method did not find favour in UK for its high cost in both time and
money. Many organisations in India are selectively using some highly diluted variants of 'assessment centres' (in the form of psychometric tests, group
discussions etc.) for promotions from supervisor levels to managerial levels or from purely technical to managerial levels. These tests are considered important
in such cases because of discontinuities of job requirement and job environment, which make prediction of potential on the basis of past performance or track-
record highly unreliable.

SHOULD THE POTENTIAL BE DISCLOSED

There has been some debate on whether the potential assessment be shown to the appraisee. By and large, both in India and in other countries potential
assessment is not disclosed to the appraisee for the following reasons:

a. The individual may himself show unpredicted changes.

b. The future needs of the organisation may not be foreseen correctly.
c. The individual whose potential is assessed to be poor at the present point of time may be unduly de-motivated and loose
interest in his job.
d. A higher potential rating, when disclosed, may indicate a promise which the organisation may not be able to honour, due to unforeseen
circumstances.
SUGGESTIONS FOR EVALUATING POTENTIAL

Due to the reasons discussed earlier assessment of potential continues to be a relatively Grey area. No validated guidelines have been evolved so far. Every
organisation, depending upon its own requirements, lays down organisation specific instructions for evaluation of potential. The quality and content of these
instructions are often perfunctory.

The following guidelines are recommended:

a. The potential assessments should be made for relatively short periods.

b. The final rating of potential should not be done just by the immediate superior (appraiser) alone. It should be made preferably by a panel of
superiors, who by virtue of their position and experience in the organization would be more aware of organization's prospects, plans and policies.
They also should have adequate knowledge of the requirements of different jobs in different functions at higher levels.
c. It must be recognized that potential evaluation is a particularly difficult exercise and it is essential to specifically train appraisers in the assessment of
potentials.
d. Potential evaluation should form a separate exercise and be carried out on a separate occasion and not along with and at the same time as the
appraisal of performance.
e. Generally, the potential assessment should not be disclosed.
f. The 'track records' and current performance do serve as reliable indicators of potential in cases of movement within the same function involving
similar skills and working environment. However, for critical transitions where there are clear and distinct discontinuities of job requirements and job
environment, the assessment of superiors (more than just immediate superior) on the basis of demonstrated strength and weaknesses and track-
records will need to be supplemented by appropriate psychometric test, interviews and group discussions.

We could therefore evaluate potential through a combination of following:

a. Reviewing present performance and 'track records'.

b. Analyzing specific traits, management skills and demonstrated behaviour.
c. Re-looking at past experience.
d. Considering age and qualification.
e. Exploring one's unused knowledge and skill.
f. Making him officiate in higher responsibility jobs / tasks.
Chapter 10 : EVALUATING TEAMS

INTRODUCTION

So far we have discussed various aspects of performance appraisal and potential evaluation. All this was from the point of view of appraising an individual, as
an individual employee in his work performance. However, quite often in today's organisational setting, individuals have to work intimately as useful team
members of a team where individual contribution to the achievement of team objectives get blurred. It is here that assessing an individual's performance
become complex.

DIFFERENT VIEWS ON EVALUATING TEAMS

A number of questions come to mind which need to be addressed if we wish to be objective, fair and pragmatic. Some of these are:

a. How do we set clear and easily measurable goals for teams?

b. How do we accurately determine the individual contribution of a team member in achievement of team goals?
c. How do we reward individual team members as per their individual performance?
d. Do we reward every team member, equally and thus, treat star and poor performer alike? Or
e. Do we create a differential by isolating top performers within each team? And if so how and on what basis?
f. Do we link all pay increments to team performance or only a part of it? And how much do we pay a team, any way?
g. What kind of linkages should be established with career progression of individuals as good team members?

For finding answers to the above questions, we could draw lessons from the experience of many organisation who have and are operating Group Financial
Incentive Schemes. Here, again the experiences have varied and often conflicting. While Maruti and Hero Honda favour these schemes, Escorts regret their
induction. Even Maruti and Hero Honda consider that group incentive schemes will be harmful in the long run. Anil Sachdeva, MD Eicher Consultancy Services
observed "Using incentive is no way a better alternative to over time. By relying on an incentive scheme to motivate people you are insulting the intelligence of
your man power". In the short run Luxor and Parker too have a fairly satisfactory group incentive scheme but its effectiveness in the long run is still to be seen.

GODREJ & BOYCE EXPERIENCE (G&B)

In this regard the experience of Godrej & Boyce (G&B) is worth mentioning. They introduced a scheme called PAY FOR PERFORMANCE PLAN (PFP) in
1994.

Under the new system, the entire manpower of a business decision is considered a team and the new performance measures that G & B has identified for
each team are:

Volume of Business Growth: This is important since markets of all products are expanding rapidly, allowing each Division to set a higher growth
target.
Net Contribution of The Division: This parameter eliminates the cost of common overheads on which a division has no control.
Net Working Capital Returns: The measure used worldwide to gauge operational excellence, has become particularly important since the
borrowing capacity of the privately held G & B is limited.

As for the support services, the parameters for their achievements have been identified as staying within budgets, company profits, manpower costs, success
at meeting deadlines and internal customer satisfaction.

G & B measures the performance of its teams on these parameters using three benchmarks - Levels 1,2 & 3. Level 3 refers to the minimum acceptable
performance -an increase over the previous year's record. The other two represent stretch targets, with Level 1 standing for a superlative performance that
surpasses all expectations. At the beginning of each year, the quantifiable indices corresponding to the levels are set, but only Level 1 targets are actually
communicated.

How are achievements translated into actual rewards? Explains B.K. Raj Kumar, 47, general manager (human resource development), G & B : "Unless a
division reaches Level 3, there is neither a team reward nor an individual one".

For each level, the actual quantum of team reward, paid as a lump sum to each member, varies according to the level achieved and the grade of the members.
Thus, a manager occupying the lowest of the six grades in a team, which has reached Level 3, receives Rs.1,200/-. At the other end of the scale, a manager
in the highest grade, belonging to a team with Level 1 performance gets, Rs. Rs.18,000/-.

Star performers within each team get additional rewards too. Identified on a relative and not on an absolute scale, best performers are categorized as
belonging either to the top five percent or to the next twenty percent of the team. And the reward is again tied to the recipient's grade and the level achieved by
his or her team.

Along with the team rewards, team-members also have their annual bonuses pegged to performance. Members of the business divisions receive 20 percent of
their consolidated basic salary only if both the company and the division make a profit. If either doesn't, the bonus drops to 10 percent and the support service
earns a bonus only if the company makes profits.

Not every employee at G & B is convinced that the appraisals are truly objective. Any new system is bound to fascinate people in the short-run (PFP has been
a great motivating factor in its one year of operation), but will it trigger off process improvements?

SOME SUGGESTIONS

A few guidelines for evaluating team are as under:

a. Make the minimum performance level the benchmark for team reward
b. Make team performance mandatory for individual rewards.
c. Distribute the team award in proportion to the basic pay of the grade to which each team member belongs.
d. Build a geometric rate of progression of the award for each successive stretch target.
e. Link the individual award to the basic pay of the grade to which individual belongs.
f. Evaluate individual performance through Appraisal Discussion with Team Leader (where both self appraisal & appraisal reports are available).
g. Reward good performer based on (f) and (b) above.